Job Openings Plunge

The major economic data released this week was mixed, but investors focused a little more on labor market weakness than on strength in other areas such as manufacturing. As a result, mortgage rates ended the week slightly lower.

Another component of the JOLTS report revealed that the layoff rate was 1.1%, roughly unchanged from a year ago. However, separate data from a large outplacement firm indicated that layoffs soared in January. Planned job cuts increased sharply from December to the highest level for the month of January since 2009 and were up 118% from the same period one year ago. 

In contrast to the labor market data, two significant economic reports released this week from the Institute of Supply Management revealed stronger than expected results. The ISM national manufacturing sector index jumped to 52.6, far above the consensus forecast of 48.5 and the highest level since August 2022. Readings above 50 indicate an expansion in the sectors and below 50 a contraction. The ISM national services sector index fell slightly to 53.8, but this still exceeded the consensus forecast. The higher tariffs on foreign goods imposed last year may be providing a lift to domestic manufacturing companies and helping them close the performance gap with services.

After a very strong start to the year, bad winter weather finally halted the momentum for mortgage applications, according to the Mortgage Bankers Association. Applications to refinance declined 5% from last week but still were a massive 117% higher than one year ago. Purchase applications fell 14% from the prior week and were up 4% from last year at this time.

Looking ahead, investors will continue to monitor comments from Fed officials for hints about future monetary policy. Delayed a bit by the recent government shutdown, the key Employment report will be released on Wednesday, and these figures on the number of jobs, the unemployment rate, and wage inflation are always closely watched. Existing Home Sales will come out on Thursday. The Consumer Price Index (CPI), a widely followed monthly inflation indicator that looks at the price changes for a broad range of goods and services, will come out on Friday.